ANALYSTS SAY: Buy, Sell, Hold (5 June 2017)

Health Management Int’l (HMI SP)

Unique Hospital Operator

Malaysia hospital operator set for a new growth era Listed on the SGX since 1998, HMI operates two tertiary hospitals in Malaysia and is the only group in Singapore that offers an independent practice model. After building a firm foundation by turning around two loss-making hospitals, HMI is set to enter a new growth phase. It will scale up via: 1) fully acquired stakes in two hospitals; 2) more than doubling the capacity of Regency Hospital; and 3) potential M&A of synergistic businesses. The market has not priced in HMI’s growth opportunities, in our view. Our 3-year EPS CAGR of 20% for FY16-19E has not included points 2 and 3. Initiate at BUY with TP of SGD0.84.

Read More ...

Old Chang Kee Ltd.

Hit by one-off non-cash item; Execution as planned

SINGAPORE | CONSUMER | 4Q17 RESULTS

 FY17 earnings missed our forecast by 66%; Excluding one-off non-cash item, FY17 NPAT was 4% below our expectation due to higher-than-expected operating expenses

 New outlets and new products should continue to drive sales; Expect three new outlets by FY18

 Reconstruction work in 2 Woodlands Terrace on track for TOP in 1Q FY18; Expect full integration and operations by 3QFY18

 Better efficiency should sustain FY18e gross margin at c.63% despite higher operating expenses

Read More ...

 UOB KAYHIAN

STRATEGY – SINGAPORE

Alpha Picks: Adjustment Amid Toppish Valuations

We take profit on Food Empire after its stellar 31% return in May and replace it with Memtech. We add SIA as a short candidate on its recent price bounce despite challenging prospects.
WHAT’S NEW
• Food Empire a clear winner and primed for profit taking. Food Empire surged 31% mom in May, after reporting solid 1Q17 results that exceeded our expectations. The solid performance was on the back of strong growth in sales for most key markets. While we remain sanguine on its long-term prospects and have a BUY and target price of S$0.90, the strong 31% price rise in May leads us to take profit and remove the stock from our alpha picks. Since the inclusion of this stock in our list in Feb 17, Food Empire has yielded a total return of 28.4% (including dividends).

Read More ... 

Singapore REITs: Valuations not cheap; be selective

Under OIR’s S-REITs coverage, overall DPU performance came in positive at 2.4% YoY in 1QCY17, a welcome reversal as compared to the five preceding quarters of flat to negative DPU growth. Looking ahead, within our coverage, we project overall DPU growth for the current financial year to decline marginally by 0.2% (market-cap weighted average), partly driven by the rights issue exercise announced by Ascott Residence Trust in Mar this year. Thereafter, we project a 2.8% growth in DPU for the next financial year.
Maintain NEUTRAL on the S-REITs sector. Besides Frasers Centrepoint Trust [BUY; FV: S$2.28], Keppel DC REIT [BUY; FV: S$1.39] and Frasers Logistics & Industrial Trust [BUY; FV: S$1.12] which we reiterate as our preferred sector picks, we also add CapitaLand Mall Trust (CMT) [BUY; FV: S$2.20] into this list. CMT has underperformed its peers and the broader sector YTD, and we believe headwinds facing the group have been priced in.

Market Strategy

Shifting Sands

• STI 3250 near term cap – Trim UOB, OCBC, Keppel Corp, SIA Eng, GLP, YZJ

• Interest switches to consumer discretionary and industrials – Genting, ST Eng, SembCorp Industries

• Hospitality REITs gather interest – CDL Hospitality Trust and Far East Hospitality Trust

• Sentiment is positive for property developers – City Dev and UOL

Read More ...